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This study aims to investigate how and why corporate social responsibility (CSR) among domestic firms in emerging countries is affected by foreign competition.
Abstract
Purpose
This study aims to investigate how and why corporate social responsibility (CSR) among domestic firms in emerging countries is affected by foreign competition.
Design/methodology/approach
The paper combines the resource-based view with the institution-based view to explain how different levels of firm–government relationships prompt firms to enact CSR when facing foreign competition. First, this paper examines how domestic firms engage in CSR in the presence of foreign competition, followed by the consideration of how different firm–government relationships affect CSR strategies for firms faced with foreign competition. Using a database of 1,665 publicly listed Chinese firms between 2011 and 2017, this paper tests four hypotheses regarding CSR behaviors, foreign competition and firm–government relationships, and the findings of this paper generally support all four hypotheses.
Findings
This study contributes to the literature by demonstrating that domestic firms in China respond to foreign competition by increased engagement in CSR, and this positive relationship is heterogeneous among different firm–government relationships. CSR is attenuated by state ownership but enhanced by high industry competition and high regional marketization.
Practical implications
The findings of this research have implications for managers regarding the integration of internal and external resources to enhance CSR as a nonmarket strategy to help maintain firms’ competitive advantages. For the government, policymakers should establish and maintain a fair and market-oriented environment that encourages firms to increase CSR engagement.
Originality/value
The paper contributes to the literature exploring the mechanisms that motivate firms’ pursuit of CSR as a nonmarket strategy under the impact of intensified foreign competition.
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Fang Jia, Zhilin Yang and Ling (Alice) Jiang
The purpose of this paper is to examine the importance of channel partners’ government relations within channel performance and explore how institutional factors interact to…
Abstract
Purpose
The purpose of this paper is to examine the importance of channel partners’ government relations within channel performance and explore how institutional factors interact to influence channel performance. A theoretical framework, inclusive of hypotheses, is proposed to demonstrate the interaction of government relations and institutional environments on firm performance. Drawing on an institutional perspective, this paper suggests that the effect of partner’s government relations on firm performance is moderated by institutional environment factors, such as government interference, legal protection, and the importance of guanxi.
Design/methodology/approach
This study conducted a questionnaire survey and collected data from 393 Chinese manufacturer managers in China.
Findings
Partner’s government relations increase focal firm’s performance and this effect is moderated by different levels of legal protection. Partner’s government relations increase firm performance only in the context of high-legal protection; whereas, when legal protection is low, partner’s government relations decrease focal firm performance. As for the interaction of institutional factors, legal protection and importance of guanxi, all three moderate the negative effect of government interference on firm performance.
Originality/value
This paper provides insights on how channel partner’s government relations, representing a key institutional capital, interact with institutional environment factors to influence channel performance.
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Dario Miocevic and Stjepan Srhoj
Coronavirus disease 2019 (COVID-19) has had a tremendous negative effect on the economies around the world by infusing uncertainty into supply chains. In this paper, the authors…
Abstract
Purpose
Coronavirus disease 2019 (COVID-19) has had a tremendous negative effect on the economies around the world by infusing uncertainty into supply chains. In this paper, the authors address two important research questions (RQs): (1) did COVID-19 wage subsidies impact small and medium enterprises (SMEs) to become more flexible towards the SMEs' business customers and (2) can such flexibility be a source for greater resilience to the crisis? As a result, the authors investigate the relationship between governmental wage subsidies and SMEs' flexibility norms towards the SMEs' business customers (study 1). The authors further uncover when and how flexibility towards existing customers contributes to SME resilience (study 2).
Design/methodology/approach
The authors frame the inquiry under the resource dependence theory (RDT) and behavioural additionality principle. The authors use survey methodology and test the assumptions in study 1 (n = 225) and study 2 (n = 95) on a sample of SMEs from various business-to-business (B2B) industries in Croatia.
Findings
Overall, in study 1, the authors find that SMEs that receive governmental wage subsidies have greater flexibility norms. However, this relationship is significantly conditioned by SMEs' competitive profile. SMEs that strongly rely on innovation are more willing to behave flexibly when receiving subsidies, whereas SMEs driven by branding do not. Study 2 sheds light on when flexibility towards existing customers increases SME resilience. Findings show that flexibility norms are negatively related to resilience, but this relationship is becoming less negative amongst SMEs with lower financial dependence on the largest customer.
Originality/value
This study extends RDT in the area of firm–government relationships by showing that wage subsidies became a source of power for the Government and a source of dependency for SMEs. In such cases, the SMEs receiving those subsidies align with the governmental agenda and exhibit higher flexibility towards the SMEs' customers. Drawing arguments from behavioural additionality, the authors show that this effect varies due to SMEs' attention and organisational priorities resulting from different competitive profiles. Ultimately, the authors showcase that higher flexibility norms can contribute to resilience if the SME restructures its dependency by having a less-concentrated customer base.
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Amonrat Thoumrungroje and Supara Kapasuwan
Given the inconclusive findings on relational ties–performance relationships, this study approaches this phenomenon through social capital theory and resource-based view (RBV…
Abstract
Purpose
Given the inconclusive findings on relational ties–performance relationships, this study approaches this phenomenon through social capital theory and resource-based view (RBV) lenses to advocate the mediating role of nonmarket- and market-based capabilities.
Design/methodology/approach
A survey-based research methodology was employed. A list of 1,425 foreign subsidiaries was identified from the Thailand Board of Investment (BOI) website, and key informants were contacted. A final response rate of 11.8% was achieved. All hypotheses were tested via path analyses with the bootstrapping technique.
Findings
The results indicate that the relationships between business- and government-relational ties and performance are fully mediated by market- and nonmarket-based capabilities with the latter serving as essential but inadequate preconditions for achieving superior firm performance.
Practical implications
To mitigate the liability of foreignness and to enhance performance of foreign subsidiaries operating in volatile emerging economies such as Thailand, government and business relational ties are crucial in developing nonmarket- and market-based capabilities. The nonmarket-based capabilities entail the ability to negotiate with and influence policy makers, which in turn helps augment the development of market-based capabilities, including the ability to be highly responsive to customers' needs.
Originality/value
This research illustrates the embedded roles of nonmarket and market-based capabilities developed through complex interactions among social actors, including the multinational enterprises’ (MNEs’) subsidiaries and government and nongovernment counterparts, in attaining superior performance. The results indicate how relational ties enable MNEs’ subsidiaries to develop various capabilities, and how these capabilities are related with each other and linked to firm performance. Findings from an emerging economy undergoing recent political and economic uncertainties also provide theoretical advancements for international business studies.
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This study investigates, from a resource dependence perspective, the effects of domestic private firms' political connections and economic power on their labor law compliance in…
Abstract
Purpose
This study investigates, from a resource dependence perspective, the effects of domestic private firms' political connections and economic power on their labor law compliance in China.
Design/methodology/approach
This study used data from a large-scale nationwide survey on Chinese domestic private firms, the Chinese Private Enterprise Survey collected from 2004 to 2012, to examine factors of interest that affect firms' compliance to labor laws. Hypotheses were tested using OLS regression models with robust standard errors.
Findings
The results indicate that domestic private firms' institutional political connections specified by the presence of a union or a Chinese Communist Party committee is positively related to firms' labor law compliance, and firm owners' formal political connections indicated by their membership in the People's Congress or the Chinese People's Political Consultative Conference have a somewhat negative effect. The post-hoc analysis shows that firm owners' political representation at the county and city levels is negatively related with labor law compliance, while the political representation at the national level is positively related to labor law compliance. Moreover, the economic power of a domestic private firm is related positively to its labor law compliance. Finally, although the authors did not find evidence that the 2008 Labor Contract Law increased labor contract coverage, it did increase pension coverage after 2008.
Research limitations/implications
The present study reveals a more refined relationship between domestic private firm owners’ political connections and the degree of labor law compliance. It also demonstrates that the economic power of domestic private firms has a positive effect on their labor law compliance. This implies the importance of the contribution of domestic private firms to economic and social development in China, warranting continued support of the development of the private sector in China.
Originality/value
This study adds to the sparse literature on the determinants of domestic private firms' labor law compliance in China. It also sheds light on whether political connections and the rising economic power of Chinese domestic private firms influence their compliance with labor laws.
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Ning Liu, Linyu Zhou, LiPing Xu and Shuwei Xiang
As the cost of completing a transaction, the green merger and acquisition (M&A) premium paid on mergers can influence whether the acquisition creates value or not. However…
Abstract
Purpose
As the cost of completing a transaction, the green merger and acquisition (M&A) premium paid on mergers can influence whether the acquisition creates value or not. However, studies linking M&A premiums to firm value have had mixed results, even fewer studies have examined the effect of green M&A premiums on bidders’ firm value. The purpose of this paper is to investigate whether and how green M&A premiums affect firm value in the context of China’s heavy polluters.
Design/methodology/approach
Using 323 deals between 2008 and 2019 among China’s heavy polluters, this paper estimates with correlation analysis and multiple regression analysis.
Findings
Green M&A premiums are negatively associated with firm value. The results are more significant when firms adopt symbolic rather than substantive corporate social responsibility (CSR) strategies. Robustness and endogeneity tests corroborate the findings. The negative relation is stronger when acquiring firms have low governmental subsidy and environmental regulation, when firms have overconfident management, when firms are state-owned and when green M&A occurs locally or among provinces in the same region. This study also analyzes agency cost as an intermediary in the relationship between green M&A premium and firm value, which lends support to the agency-view hypothesis.
Originality/value
This study provides systemic evidence that green M&A premiums damage firm value through agency cost channel and the choice of CSR strategies from the perspective of acquirers. These findings enrich the literature on both the economic consequences of green M&A premiums and the determinants of firm value and provide a plausible explanation for mixed findings on the relationship between green M&A premiums and firm value.
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Juliana Souza Bittar-Godinho and Gilmar Masiero
This paper aims to investigate the political involvement of a corporate foundation (CF) though CSR under two perspectives: CF managers and the sponsor firm managers.
Abstract
Purpose
This paper aims to investigate the political involvement of a corporate foundation (CF) though CSR under two perspectives: CF managers and the sponsor firm managers.
Design/methodology/approach
A single case with a Brazilian CF was conducted. Interviews with sponsor firms and foundations managers were combined with firms’ sustainability reports data and CF’s website information.
Findings
It was found that CF acts as an ambassador and can be a source of political legitimacy for their sponsor firm. They intermediate in governance challenges as the goals and working style of the CF, firms and municipalities can be sometimes antagonistic.
Research limitations/implications
The authors could not reach the municipalities officials and their perception of the Public Management Program (PMP).
Practical implications
The PMP creates personal and organizational relationships with public officials, a resource that can be employed to impact the political strategies of the sponsor firm.
Social implications
The authors also show how CF’s may help managers to deal with the typical Brazilian peculiarity of policy discontinuity in local governments.
Originality/value
This case study sheds light a new phenomenon: CF’s support on public management. It adds to the CSR and corporate political activities literature, the role of foundations as ambassadors of the relationship between the firm, government and society. They are not only filling gaps left by the State but are also dealing with local governments administrative deficiencies.
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Wu Wei, Yanping Li and Pengcheng Zhang
The purpose of this paper is to present a conceptual framework of corporate political performance (CPP) in corporate political activity. In fact, CPP refers to political benefits…
Abstract
Purpose
The purpose of this paper is to present a conceptual framework of corporate political performance (CPP) in corporate political activity. In fact, CPP refers to political benefits obtained by firms when they formulate and implement political strategies to influence the public policy process though the investment of political resources. This paper focuses on answering what is perhaps the most fundamental question to strategy researchers: “How do firms engage in political strategies to improve their performance?”
Design/methodology/approach
In building a theoretical framework, this paper, first, provides a historical analysis of political efficiency and effectiveness. Then, this paper attempts to illustrate conceptually our understanding of political performance process by a generalized and contingent approach. Finally, this paper discusses the framework, its theoretical contribution and practical implications for Chinese management, and comments on limitations for future research.
Findings
The paper presents a conceptual CPP model that integrates political efficiency and effectiveness approach. In the conceptual framework, three phases of CPP include sources of political advantage, political competitive advantage and political performance outcome, and three dimensions are identified as political efficiency, effectiveness and adaptiveness. CPP approach is not a “generalized” nature of political performance measurement, as the difference among firms and industries in this area may be significant, which reflects the effect of context, reaction and outcome factors.
Research limitations/implications
While it provides a strong theoretical foundation, this paper still has almost little empirical evidence concerning CPP process. However, how to measure CPP has increasingly begun to focus on an important research domain in corporate political strategy literature. This paper believes that this model has a need for future research to test its feasibility by using the measurement scales in Chinese context.
Originality/value
This paper is original in its attempt to measure CPP to help the business practice in corporate of political activity, and broaden corporate political strategy research in mainstream strategic management.
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The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and Commerce…
Abstract
Purpose
The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and Commerce (CFIC), affects corporate philanthropy in an emerging market.
Design/methodology/approach
Through an analysis of survey data gathered from Chinese private firms, this paper conducts multiple regressions to examine the impact of the CFIC membership on corporate philanthropy.
Findings
Empirical results show that the CFIC membership of private entrepreneurs is significantly positively associated with corporate philanthropy. Moreover, this study finds that the provincial marketization level and the firm Communist Party branch attenuate the positive association between CFIC membership and corporate philanthropy, indicating that the effect of CFIC on corporate philanthropy is more pronounced in regions with lower marketization level and firms without Communist Party branch. The findings are robust to various alternate measures of corporate philanthropy and remain valid after controlling for potential endogeneity.
Practical implications
Firms will be more active in corporate philanthropy to respond to the government’s governance appeal when they join the CFIC. This highlights the implications of political connections and in particular on the value of government-controlled business associations in the Chinese business world.
Originality/value
This study extends the literature on the determinants of corporate philanthropy and deepens the theoretical understanding of the governance role of business association with Chinese characteristics.
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Hailiang Zou, Zedong Liang, Guoyou Qi and Hanyang Ma
This study aims to examine the corporate donations in response to the intensive outbreak of the COVID-19 pandemic in China in 2020 and proposes that the local spread of COVID-19…
Abstract
Purpose
This study aims to examine the corporate donations in response to the intensive outbreak of the COVID-19 pandemic in China in 2020 and proposes that the local spread of COVID-19 is negatively associated with corporate donations due to the non-trivial costs, but meanwhile, strong institutional pressures based on institutional theory are put on firms to donate, which thus creates a dilemma for firms. This study further argues that the dilemma is heterogeneous across different institutional fields.
Design/methodology/approach
Using a sample of Chinese listed companies during the intensive outbreak of this pandemic, a two-stage Heckman selection model is conducted to address the potential sample selection bias.
Findings
This study reveals a negative relationship between the local spread of COVID-19 and corporate donations, confirms the driving effect of various types of institutional pressure and finds that the intensity of the COVID-19 pandemic strengthens the effect of coercive pressure and mimetic pressure on philanthropic giving but weakens the effect of normative pressure.
Originality/value
This study extends the knowledge on firms’ philanthropic response to natural crises, as the COVID-19 pandemic has not only led to a public health crisis but also to a global economic crisis, and how the effects of institutional pressures are affected by a situational crisis. This work enriches the literature on corporate philanthropy and crisis management and has some implications for both policymakers and business practitioners.
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